Page 207 - Sustainable Cities and Communities Design Handbook

Life Cycle Analysis Chapter j 10 181

Rather than identify the precise requirements for reporting cost-effectiveness
results for all types of proceedings or reports, the approach taken in the manual
is to:
l specify the components of benefits and costs for each of the major tests
l identify the equations to be used to express the results in acceptable ways
l indicate the relative value of the different units of measurement by
designating primary and secondary test results for each test.
It should be noted that for some types of DSM programs, meaningful cost-
effectiveness analyses cannot be performed using the tests in the SPM. The
following guidelines are offered to clarify the appropriated “match” of
different types of programs and tests:

1. For generalized information programs (e.g., when customers are provided
generic information on means of reducing utility bills without the benefit
of on-site evaluations or customer billing data), cost-effectiveness tests are
not expected because of the extreme difficulty in establishing meaningful
estimates of load impacts.
2. For any program where more than one fuel is affected, the preferred unit of
measurement for the RIM Test is the lifecycle revenue impacts per
customer, with gas and electric components reported separately for each
fuel type and for combined fuels.
3. For load building programs, only the RIM Tests are expected to be applied.
The TRC and PAC Tests are intended to identify cost effectiveness relative
to other resource options. It is inappropriate to consider increased load as
an alternative to other supply options.
4. Levelized costs may be appropriate as a supplementary indicator of
cost per unit for electric C&LM programs relative to generation options
and gas conservation programs relative to gas supply options, but the
levelized cost test is not applicable to fuel substitution programs (since
they combine gas and electric effects) or load building programs (which
increase sales).
Delineation of the various means of expressing test results in Table 10.1 is
not meant to discourage the continued development of additional variations for
expressing cost effectiveness. Of particular interest is the development of
indicators of program cost effectiveness that can be used to assess the
appropriateness of program scope (i.e., level of funding) for General Rate Case
proceedings. Additional tests, if constructed from the net present worth in
conformance with the equations designated in the manual, could prove useful
as a means of developing methodologies that will address issues such as the
optimal timing and scope of DSM programs in the context of overall resource
planning.